This document provides an overview of basics of insurance. It explains that insurance is a system where people come together as a group and contribute money, which is then used to help those in the group affected by defined events. Every asset has a lifespan and insurance helps reduce the financial impact of unforeseen circumstances that could damage or destroy assets. Examples are given of early insurance practices, like Chinese traders distributing risk by dividing goods among multiple boats. The document also outlines how insurance works by pooling funds from people with similar risks to compensate the unlucky few through insurance contracts.

1. Basics of Insurance
Presented by
People Praxis Solutions

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What is Insurance ?

3. What is Insurance ?
• Insurance is a system of sharing the loss by
mutual support
• People come together as a group to
contribute money which is used by the
affected people in the same group in defined
timelines
• Money which is not utilized is distributed back
to the unaffected people in the group in
defined timelines
• Insurance is concerned with the protection
of the economic value of assets
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4. What is Insurance ?
• Every asset has certain life span
• Adverse situations arise when the
asset gets lost / destroyed due to
unforeseen circumstances
• Insurance helps in reducing the
financial impact of such adverse
situations
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5. Examples of Insurance
• In ancient days, the Chinese traders would
keep their goods in different boats while
sailing over treacherous rivers
• They assumed that even if any of the
boat suffered a fate, the loss of goods
would only be partial and not total
• The loss could be distributed and
thereby reduced
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6. Need for Life Insurance
• Death is certain but the timing of
occurrence of death is not
• There are two risks an individual
faces relating to span of life
• The risk of dying too early
• The risk of living too long
• Life Insurance gives financial
protection against both these
eventualities
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‘WHAT COMES FIRST DEATH OR TOMORROW’

7. How Insurance works ?
• There must be an ASSET which has an economical
value
• Asset can be
• Physical like car, building, etc,
• Non-physical like name, goodwill, etc,
• Personal like, eyes, limbs, other parts of the body
• The chance of loss of an Asset is called RISK caused by
a risk event called PERIL
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8. How Insurance works ?
• People with SIMILAR ASSETS are
exposed to SIMILAR RISKS
• POOLING of funds is done to secure
similar risks caused by Perils
• The process of pooling funds and
compensating the unlucky few is
carried out by an Insurance Company
which enters in to a contract with
each person who is called Insured or
becomes the Policy holder
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9. Business of Insurance
• Life
• Individual Insurance
• Group Insurance
• Non - Life
• Fire
• Marine
• Miscellaneous
• Insurance of intangible assets
• Payment defaults, changes in currency
exchange rate, economic policies, political
disturbances in other countries
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10. Human Life Value
• Every human is a money generating asset
• A human being generates income by
• Physical labor
• Mental capabilities
• The income-generating capacity of the ‘human’
asset may be lost in the event of
• Premature death
• Illness
• Disability
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11. Insurance as a social security tool
• Life Insurance compensates the economic loss in the unfortunate event of
the bread winner not being in a position to earn livelihood
• Without this the affected family might be pushed towards the lower
economic strata of society further increasing the burden on society
• Insurance thus is a wonderful social security mechanism in capitalistic
society where individuals have to support themselves
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12. Advantages of Life Insurance
• Gives a sense of security
• Helps achieve money-spending
needs
• Helps in generating wealth
• Helps to bridge the financial gap
generated by an unfortunate
happening
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13. Thank You!